Mortgages are indeed a great way of making an investment and fulfilling one’s dreams. But, they also put a burden on the borrower to return them so that one can take a sigh of relief. There are different types of mortgages which have different interest rates. A person taking a mortgage will always instinctively prefers to pay off the mortgage as soon as possible in order to lessen the debt and make the property more equitable incase he has to borrow against it. But, care should be taken in paying off the mortgage as every type will have different impact. Here are some of the points why one should aggressively pay off the mortgage:
Situations Where Aggressively Paying Off Mortgage is Justifiable
- If you have a mortgage, like a second mortgage in Toronto, with a high interest rate, then you can pay off it quickly because of the fact that any additional payments will be involved in overall decreasing the principal. As a result, the payments will be lowered in less time enabling you to negotiate better for refinance.
- Another situation where you can pay off your mortgage aggressively is when you have access to the Home Equity Line of Credit which could be used as your emergency fund as well. In such situation, your extra money can be added to the mortgage therefore, it is advisable to pay off the mortgage urgently.
- If you are one of those people who don’t like investment alternatives such as buying stocks or bonds, then you should pay off your mortgage soon as it involves no risks and you will be able to release the burden of having extra money at your hand.
- Another case where you should pay off the mortgage soon is when you have a refinanced mortgage. If you are borrowing money to purchase such items which have a limited life-span, then it is better to pay off the load soon as you won’t want to keep on paying for an item for the next 5 to 10 years which is no longer functional.
Ways to Pay Off Your Mortgage Aggressively
- How you should pay off your mortgage depends upon your financial incomings. If you are an employee who gets his salary at the end of the month then, you can increase your regular payments so that these can be directed to the principal.
- If you get the extra raise in the form of a bonus at the end of a year then, you can make a lump-sum payment for the principal.
No matter how you pay off your mortgage, it will be the largest debt that you will ever have to pay. Therefore, always keep your income in consideration before purchasing so that you can pay off the resulting mortgage with ease. Paying off mortgage aggressively has its own pros and cons and it totally depends upon your budget and the purchase. Making a positive and thoughtful approach is integral in paying off your mortgage as it will change your future financial goals.